Wednesday, July 3, 2013

Jul 3 (1819) Bank for Savings opens in NYC: "To encourage and assist the laboring classes to make the most of their earnings"

On this day in 1819, The Society for the Prevention of Pauperism, led by Thomas Eddy (pictured), successfully opened the first Bank for Savings in New York City. The mission of the Society for the Prevention of Pauperism was "to encourage and assist the laboring classes to make the most of their earnings by promoting the establishment of a Savings Bank."

According to the bank's Constitution, depositors earned a fixed rate of interest of five per cent per year on sums from five to fifty dollars and six per cent on sums larger than fifty dollars. All investments were made in Government securities of the United States and New York State, the Corporation of the City of New York and other funds as the Directors deemed expedient.

According to an 1896 article about the history of banks for savings, co-authored by John P. Townsend, these institutions had become popular in the late 18th century "as Europe and America were shaken by a Vesuvius of democracy." With more freedom comes more responsibility, and savings banks allowed laborers to increase their wealth through their own efforts and ingenuity rather than through government assistance. They also encouraged all savers--the workers and the wealthy--to share in prosperity. A November 1816 notice in the New York Post explained

"among the many institutions which are established at the present day for the mitigation of human misery and misfortune, the associations termed in Europe, 'Savings Banks,' are perhaps not the least important. In London,
Liverpool, and Edinburgh, they have been established and carried on with great success. The design of these associations is extremely simple. It is to effect a secure place of deposit for the earnings of the laboring part of the community: and at the same time to give them the benefit of an accumulation of interest."